Celebrate World Habitat Day: Learn About Housing Microfinance

October 10, 2013

By Dan Petrie: Assoc. Director of Congressional Relations, HFHI

This week, Habitat for Humanity joined the United Nations and others to celebrate World Habitat Day, a time to recognize the 1.6 billion who need a decent place to live. Reaching that many people can seem daunting, but a recent report by Habitat for Humanity suggests a way that can help scale our efforts.

Incremental building, a process whereby houses are assembled in stages as needs change and resources become available, accounts for up to 90 percent of residential construction in the developing world. On average though, only 3 percent of the population in developing economies has a loan for a mortgage. This gap presents an opportunity to link financial services to the incremental building practices of the developing world. Housing microfinance (including savings, credit, remittances and insurance), bundled with basic housing support services, has demonstrated it can lead to scalable, replicable and sustainable solutions.

Housing policy recommendations and conclusions from the report include:

Housing microfinance should be recognized as an effective way to finance housing for low-income populations in the developing world.

Secure land tenure is essential for successful housing microfinance.

Incremental housing and housing microfinance should be approached as sources of developmental and financial returns.

To function best, housing microfinance needs to be coupled with financial education and construction technical assistance.